People are becoming homeowners later than ever – if they are becoming homeowners at all. There is a lot of talk about young people moving away from homeownership – out of choice.
In terms of the future of young people thirty or forty years down the line, none of this is good news.
In fact it is a deeply worrying development.
Ownership of valuable assets can make for a happy, comfortable, stress-free retirement for older people.
With property being the main asset for the average person, the move away from home ownership is both surprising and disturbing.
Becoming a homeowner is a way to protect and secure your financial future and retirement.
If you leave it too long to buy, you may not get on the property ladder at all – or you may get on it too late to be able to fully pay off your mortgage by the time of retirement.
1. Buyers are becoming older
In 1960 the average first time buyer was 23; today it is 30 (research by Keepmoat Homes).
According to Halifax’s latest first time buyers review, the average age of a first time buyer is 31 nationally, 33 in London.
UK Finance suggests the average first time buyer in London is 32 with a household income of £70,000.
The trend is clearly one in which first time buyers are getting older.
With the average price of a UK home still rising, affordability seems likely to worsen not improve.
These figures, which are of course averages, indicate that there are many thousands of first time buyers in their late thirties, forties and even fifties.
2. Fewer people are buying
The 2016-17 Family Resources Survey by the DWP showed that in the 10 years to 2017 there was a sharp increase in people renting. At the same time there was an equivalent reduction in people buying.
In 2007, 13% of the population rented from the private sector – by 2017 it was 20%. The percentage of people buying with a mortgage fell from 35% to 28% over the same period.
From 2007-2017 the percentage of the population renting increased from around 30% to 37%.
The percentage of people renting increased in all age groups over the period. The proportion in the 35-44 age group doubled from 13% to 26% – the biggest increase. In the 25-34 age group the increase was also steep – up from 28% to 46%.
UK Households by tenure in 2017:
34% owned outright
28% buying with a mortgage
17% social renting
20% private renting
Source: Family Resources Survey.
3. The disadvantages of being a tenant
If you are one of the ever growing number of tenants, there is every reason to worry about your retirement.
As a tenant you will not have the valuable capital asset of a home in your retirement years.
You will not be a homeowner free of mortgage, able to live rent free with opportunity to release a large amount of equity for a range of beneficial purposes including: topping up your pension, maxing out on holidays or helping family members.
Rents are going up all the time. As you move towards retirement your earning power will fall. Will you even be able to afford rents going forward, especially if you are a private sector tenant?
As a private sector tenant you will not have long-term security of tenure; each time your tenancy ends, you could potentially be asked to move out by your landlord.
Constantly having to move will not only be stressful, costly and inconvenient, it will become harder and more disruptive the older and less mobile you become.
You may harbour thoughts of getting social housing in your senior years, but with such housing on the decline the possibility of that reduces with every passing year.
At present, the vast majority of older people own their home or find themselves in the relative security of being a council or housing association tenant.
The future however will be very different – with private sector tenancies having now overtaken social tenancies.
Unless there are changes in the law, we are going to have millions of older people in private sector housing at the mercy of a system where rents are not controlled and landlords are entitled to move out tenants on the expiry of a tenancy.
Yes, it is true that politicians are increasingly aware of the looming crisis, but whether they can or will be able to take adequate steps to address the problem is very much in doubt.
HOME OWNERSHIP MADE EASY
Why become a homeowner (the many benefits enjoyed by homeowners)
Easy home ownership (10 super-powerful reasons for homeownership)
Top 5 tips for first time homeowners the world over (essential general information)
10 easy ways onto the property ladder (must know ways to become a homeowner)
Best time to buy (a look at the ideal time to buy a property )
4. Buy for a better retirement
If a future as a tenant is not as bright as you thought or fills you with concern or even dread, the obvious solution is to focus your efforts on buying.
Yes, the trend is away from home ownership, which is undoubtedly becoming more difficult. However, that is not to say YOU or members of your family or loved ones will not be able to buy.
Certainly if you want a reasonably tolerable life in your retirement, you should pull out all stops to buy – whatever your age. The closer you are to retirement, the more stops you should pull out.
If you don’t know now, you should make it your purpose to find out soon why renting is super stupid.
It is possible to put together a quick house deposit and get on the housing ladder reasonably fast. With belief, determination and flexibility, home ownership is possible for most people in the country – even those on average earnings.
If you think being a tenant is the cool, cost-effective, flexible, smart and carefree way to live, now and in the future…think again! Becoming an owner-occupier seems likely to be better for your retirement.
In the choice between renting and owning, where do you stand – and why? Please leave your comments, observations or questions below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com